Ratas replied to the interpellation concerning the impact of the fuel price

19.11.2018 / Press releases, Plenary assembly

The interpellators referred to the fact that, for common consumers in Estonia, the fuel price was already at the level of the most expensive European Union countries. In the opinion of the transport sector’s professional associations, the situation in the Estonian transport sector is not sustainable in the current tax and economic environment and cannot compete with the more favourable conditions of the neighbouring countries.

The interpellators wished to know how the companies who refuelled their vehicles in the neighbouring countries could be brought back home, and how the rise in the price of liquid fuel affected the common consumer.

Ratas said that the fuel price increase was definitely an issue that the Government was following closely. “When we speak of taxes more generally and the shaping of the tax environment, the Ministry of Finance is conducting a study on the impacts of excise duties ‘The risks, opportunities and impact of excise policy on the economic environment in the conditions of the trading in the border areas’. It will provide additional information to make further excise duty policy decisions,” Ratas explained. He noted that the purpose of the analysis, among other things, was to obtain a more thorough overview of the economic impacts of the excise policy of recent years, as well as to assess the impacts of the future excise duty policy choices. The study will be completed by the end of February next year.

Ratas referred to the fact that there had been tough competition in the international carriage market in recent years, and the Estonian road transport companies had lost their market share to companies in the neighbouring countries, Latvia and Lithuania. “One of the reasons is the wage pressure resulting from the labour shortage which increases the costs of Estonian companies and raises the prices of services. The higher fuel duty also affects the costs of Estonian companies. So the growth of costs has exceeded the growth of revenues, and the profitability has decreased in the land transport sector in recent years,” Ratas assessed the situation. He added that the excise duty rates on diesel fuel in Latvia and Lithuania were among the lowest in the European Union. In Estonia, the rate is 493 euro per 1000 litres, in Lithuania, it is 330.17 euro per 1000 litres, and at the moment there is no information that Lithuania is planning to raise the excise duty rate in the near future. The difference in excise duty rates compared to Latvia decreased this year, because the excise duty rate on diesel fuel was raised to 372 euro per 1000 litres in Latvia on 1 January 2018. Under current decisions, Latvia will continue with rises in excise duty, and the excise duty rate will reach 414 euro per 1000 litres by 2020.

“Considering that land transport accounts for 40 per cent of the total diesel consumption, which makes it the greatest consumer of diesel fuel among all areas of activities, a potential lowering of the excise duty may have the greatest impact on land transport. Lowering of diesel fuel duty rates will also affect households, but the impact on them would be more modest, because households account for around 12 per cent of the share of diesel consumption,” the Prime Minister noted. In his words, factors external to the price also affect the competitiveness of the transport sector.

The minister of Health and Labour Riina Sikkut replied to the interpellation concerning the specialised medical care procurement by the Estonian Health Insurance Fund (No. 449) and the interpellation concerning the crisis created in the organisation of specialised medical care (No. 452).